Decentralized Identifiers: From Concept to Practical Application in 2024

Why Is the Crypto Community Focusing on DID Now?

Web3 is developing rapidly, and one of the central issues is managing personal digital identity without intermediaries. The startup Worldcoin, associated with prominent figures in the tech industry, has effectively brought the topic of decentralized identifiers from niche developer circles to mainstream interest. The launch of the WLD token (current price $0.50 with a market cap of $1.28B) clearly demonstrated that the market is ready to reward innovative approaches to digital identity management through blockchain solutions.

What Is Behind the Abbreviation DID?

In traditional internet architecture, your identity belongs to the platform — social networks, banks, services. A decentralized identifier is a revolution: you become the owner of your digital ID, stored on the blockchain, rather than on third-party servers.

Technically, it works simply: the blockchain generates a pair of cryptographic keys for you. The public key is open to everyone and serves as an identifier. The private key remains with you and is used to confirm your rights to manage data. No centralized organization can block you, sell your data, or demand access.

Transformation of the Cryptocurrency Ecosystem Thanks to DID

Against the backdrop of increasing attention to transaction security and fraud prevention, DID becomes a tool for identity verification that simultaneously preserves anonymity. Each operation in DeFi applications is anchored to a verified identity — this significantly reduces the risk of fraud schemes but does not disclose your real information.

For the decentralized finance application ecosystem, this is critical: smart contracts need an authentication mechanism that does not require trust in a central database. DID solves exactly this problem.

Key Advantages of Decentralized Identity

Full control over personal data. You decide what information to disclose and to whom. No one can use your data without explicit consent.

Protection against leaks. The absence of a single data repository means no single attack point for malicious actors.

Cross-platform operation. One identifier — multiple services. No need for re-registration and verification on each platform.

Cost savings on verification. When the need for intermediaries disappears, the process becomes cheaper.

Projects Shaping the Development of the DID Market

Worldcoin: Biometrics on the Blockchain

Worldcoin took an unconventional path — used biometric data (iris scan) to create a unique World ID. This guarantees the principle “one person — one account” globally. The WLD token ($0.50, up +0.28% in 24h, with a capitalization of $1.28B) is distributed to World ID holders. The platform is expanding to Ethereum, Optimism, and Polygon, while Tools for Humanity is developing World Chain — its own L2 prioritizing human interaction over bots.

Main advantage: biometric data provides an incredibly high level of identifier uniqueness.

Challenges: privacy concerns when using biometrics, bureaucratic barriers in different countries.

Lifeform: 3D Avatars as the Foundation of Identity

The company creates hyper-realistic 3D avatars and links them to a decentralized DID protocol. The startup secured $100M Series A funding and $15M early-stage investment, now valued at $300M. Over 3 million addresses already interact with the platform. The approach allows managing Web3 identity visually and interactively, integrating into Web2 social networks.

Distinctive feature: visual layer of digital identity, a fusion between virtual and real.

Risks: technological complexity, potential cyberattacks, need for specialized knowledge.

Polygon ID: Privacy via Cryptography

Polygon ID uses zero-knowledge proofs (ZKP) — the user confirms data about themselves without revealing the data itself. In practice, this means logging into dApps without passwords and secure information exchange. In February 2024, a collaboration between Polygon Labs, Human Institute, and Animoca Brands launched the Humanity Protocol, which uses palm recognition.

Feature: maximum privacy thanks to cryptographic methods.

Limitations: technology is young, integration complexities.

Ethereum Name Service: Human-Readable Names for Addresses

ENS turns long addresses like 0x123abc… into readable names like alice.eth. In 2024, partnerships with GoDaddy and integration of .box domains (the first on-chain TLD approved by ICANN) emerged. This simplifies life for users without technical expertise.

Advantage: mass adoption, universal utility.

Disadvantage: network throughput limitations of Ethereum.

Space ID and Galxe: Alternative Approaches

Space ID develops a universal domain name space for multiple blockchains, allowing a single identifier to work everywhere. Galxe uses account data to create a network of decentralized attestations, used in reputation systems and access management.

Space ID: cross-chain compatibility.

Galxe: innovative infrastructure for reputation and verification.

Obstacles to Mass Adoption

Implementation complexity. Transitioning from centralized systems requires technological upgrades and legislative rewrites. People are accustomed to familiar methods — new approaches are adopted slowly.

Cryptography and blockchain specifics. The technical barrier deters unprepared users. Ensuring compatibility across different blockchains is even more challenging.

Private key management. Losing a key = losing access to identity. This is a huge responsibility for ordinary users.

Regulatory chaos. Each country has its own data protection rules. Balancing decentralization with compliance (KYC/AML) is difficult.

Future Trends for DID in the Coming Years

Mass integration. DIDs will become part of everyday DeFi operations, NFT marketplaces, and DAOs. User experience will improve.

Enhanced cryptographic protection. Projects will refine privacy features, implement new ZK proofs, and biometric systems.

Inter-blockchain compatibility. Users will be able to use one identifier across Ethereum, Polygon, Solana, and others simultaneously.

DID as a regulatory tool. Paradoxically, decentralized identification will solve KYC issues for the crypto market while maintaining privacy.

Beyond crypto. IoT devices, AI systems, healthcare, e-governance — decentralized digital identities are needed everywhere.

Summary

Decentralized identifiers are not just another crypto gimmick. They represent a rethinking of the relationship between users and systems in the digital space. Digital IDs embedded in blockchain infrastructure give you control over the data you generate. As projects like Worldcoin, Lifeform, and Polygon ID develop, society will gradually shift toward decentralized management of personal information. It’s a long process, but the direction is already clear.